Nearly ₹18,000cr gone! Why Trent shares crashed today
What's the story
Shares of Tata Group's fashion retailer Trent, which owns Westside and Zudio chains, plummeted by 10% on Tuesday. The stock hit a day's low of ₹3,010.10 on the Bombay Stock Exchange (BSE), erasing nearly ₹17,773 crore from its market capitalization. The fall was triggered by a disappointing Q1 revenue growth that missed street estimates.
Financial performance
Trent's standalone revenue growth slower than street estimates
Trent's standalone revenue for Q1 stood at ₹5,666 crore, a year-on-year growth of about 19%. However, this was lower than the expected 22% YoY growth. The company's product sales revenue also grew by around 19% YoY. The slower growth was mainly due to a decline in revenue per store and moderated store expansion during the quarter.
Store performance
Revenue per store declines for 2nd consecutive quarter
Trent's store count increased by 26% YoY in Q1, but revenue per store fell by about 5% YoY. This is a departure from the 4% decline seen in the fourth quarter of FY26. The decline indicates either a slower ramp-up of new stores or continued cannibalization effects at existing outlets.
Market outlook
Citi warns of potential challenges ahead for Trent
Brokerages are divided over Trent's future prospects. Citi, which has a 'Sell' rating and a target price of ₹2,733, flagged the company's standalone revenue growth of 19% YoY against its estimate of 23%. It also noted that average revenue per square foot fell by 12.2% YoY. Citi acknowledged Q1 is usually a weak season for store additions.
Positive forecasts
Positive outlook from Morgan Stanley and Bernstein
Morgan Stanley, which has an 'Overweight' rating with a target price of ₹3,151, said Q1 standalone revenue excluding GST grew 19% YoY. It expects the EBITDA margin to improve by 100 basis points YoY to 18.5%. Bernstein also maintained an 'Outperform' rating with a target price of ₹3,500. Both brokerages view the slowdown as largely seasonal and expect healthy Zudio additions and steady margin trends to aid recovery.